Thursday, July 30, 2009
Lessons to take away from it:
Always read your title insurance commitment prior to closing.
Always buy a professional survey prior to closing.
This homebuyer did neither. Buying real estate is a major purchase and a consumer must participate with a thinking cap on.
When you shop for your title insurance and settlement services, confirm that you will have a title insurance commitment for your review prior to closing. That's critical, because most title agencies send the copy to your lender and presume they will forward it to you. That rarely happens. At The Closing Specialists, we recommend in writing that you buy a survey and we have you sign a hold harmless if you choose not to. We mail a copy of the title insurance commitment and ask that you review it prior to closing.
Never - ever - rely upon visual cues for lot lines. Hedges and mowing lines are not reliable indicators.
Why does title insurance not cover items that would be discovered by a survey? Because without a survey in hand, title insurers would be taking on unknown risk. You have to purchase a survey to have that knowledge. Most people don't want to spend the money, but as you can see, buying real estate without a survey is very risky. This consumer should not be blaming title insurance. He should have been a more prudent consumer.
If you are reading this blog post, I know YOU are a prudent consumer, so stay cautious and do it the right way, eh?
Wednesday, July 29, 2009
Tuesday, July 28, 2009
Monday, July 27, 2009
TIRBOP withdrew it's request for a premium overhaul following pressure by the office of the Attorney General.
So, the only change is to the CSL which extends coverage to buyers and lessees. Effective 9-14-09.
Thursday, July 23, 2009
Tuesday, July 21, 2009
The U.S. title-insurance industry faces increasing pressure from regulators to justify the fees charged to consumers for ensuring they have clear ownership of their homes.
For most people, title insurance is just another mysterious fee they must pay when they buy a home or refinance a mortgage. Unlike some of those fees, though, title charges aren’t negligible. They range from several hundred to several thousand dollars—and last year totaled more than $10 billion for the title industry. Lenders insist on the insurance to protect them against the possibility that a taxing authority, another creditor or a disgruntled heir may have a claim to the property, among other risks.
Friday, July 17, 2009
Monday, July 13, 2009
David H. Stevens was the past President & COO of Long & Foster Realtors; Vice President of Mortgage, Title, and Insurance Division for Longer & Foster; Executive Vice President for Wells Fargo Home Mortgage; on the Lender's Advisory Council for the Mortgage Bankers Association (MBA); on the Board of Directors of the National Association of Mortgage Brokers (NAMB); on the Board of Directors of the Real Estate Services Providers Council (RESPRO).
Friday, July 10, 2009
Monday, July 06, 2009
June 6, 2009
Commissioner Joel Ario
Pennsylvania Insurance Department
1326 Strawberry Square
Harrisburg, PA 17120 RE: final comment on public hearing for title insurance
Dear Commissioner Ario:
The give and take in the public hearing on title insurance was insightful and certainly raised some ideas that were outside of the box for me. Thank you for creating the thoughtful forum and shaking things up a bit in our creaky old industry.
DEREGULATING THE TITLE AGENT PORTION OF THE TITLE INSURANCE PREMIUM: It is clear to me that maintaining fixed pricing of title premiums has not helped to foster better quality in product or service. I don’t think breaking down that wall of price regulation will make much of a difference in quality. We have lots of crappy title agents with high prices so we might have lots of crappy title agents with low prices. On the other hand, if prices come down through competition, maybe some of the crappy operators who are only there for the big bucks will find some other easy money scheme and get the heck our of our once honorable profession.
SET AUDIT STANDARDS AND REQUIRE TITLE AGENTS TO HAVE AN ANNUAL CPA AUDIT: I believe we can achieve better quality in product and service by stiffening oversight of licensees. Key oversight has got to be escrow account related. This is where defalcations take place and is one of the largest sources of claims for title companies. An annual audit, perhaps similar to that performed for FHA mortgage lenders which looks at more than simply the financial records but also tests a random selection of files for adherence to regulatory guidelines, paid for by licensees, would help separate those who are serious title insurance professionals from those who are in the business for a fast easy buck.
CONSUMER DISCLOSURE: Teaming with other licensed persons in a position to make title insurance referrals, such as licensed real estate brokers and licensed mortgage lenders, so that consumers receive good disclosure BEFORE their title insurance order has been processed would help break up title agency steering relationships.
ANCILLARY FEES: Consumers are most confused when shopping by the ancillary fees charged by one title insurance agent versus another. The difference can be hundreds of dollars on the same transaction but if the consumer doesn’t know to ask for a thorough quote, they will make their shopping decision without having full disclosure of costs. Whether or not you move to deregulate the title agent portion of the premium, I believe we need a better way of helping consumers shop and consider these ancillary costs.
NOTARY SIGNING AGENT/INDEPENDENT CLOSER: I see the notary signing agent as sort of like an untested or unlicensed dental hygienist who is out there working on the public but not under the supervision of a dentist. I don’t know anything about dentist operations but as a consumer of dental services I presume a dental hygienist is tested or licensed and works under the supervision of a dentist. I have to think consumers of title insurance services make the same presumption about a closer who comes to their home and handles their very private information and very important transaction. The fact is that we presently have no official standards for closers in a title insurance transaction. I’d like to see the department require that closers in a title insurance transaction be either licensed title agents or employees of a licensed agent.
Should you have a question or concern, please feel free to contact me.
THE CLOSING SPECIALISTS
204 West Main Street, Ligonier, PA 15658
Amended Rate Filing
Original Rate filing
Here's my comment to the PA Dept. of Insurance concerning the amended rate filing:
I'd like to offer these comments concerning the request by TIRBOP to increase the CSL fee to $75 and extend coverage to consumers.
Let's give consumers a choice.
We know mortgage lenders will require a CSL, most do. Do purchasers need or desire the type of coverage offered in the CSL? Perhaps. Should a purchaser in a mortgage transaction be forced to pay for the coverage if they do not want it?
I would think the purchaser most at risk of financial loss in a defalcation is the purchaser buying property without a mortgage, paying cash. If there is value in the extra coverage offered in the CSL, will it be available to cash purchasers and should they be forced to pay for lender coverage?
In addition, there are two other parties who suffer when a title agent goes south with the money, and that's the seller and a borrower in a refinance. I realize that neither of those parties are purchasing a title insurance policy and perhaps for that reason the coverages offered under a CSL cannot be extended to them for a fee.
From a title agent point of view, this new CSL isn't going to impact me directly. As a professional who tries to keep the interest of the consumer in the radar of decisionmakers, I think the underlying question is really what causes losses covered by the CSL and how best to prevent these losses so that our title companies remain solvent an the public isn't damaged.
I continue to be a proponent of annual independent CPA audits of title agents. Raising the bar of quality in our licensing and regulatory process will do more to fix our solvency problems and uncovered consumer/lender losses than just tossing money in the CSL bin.
I know there are some in the industry who will argue that consumers do not understand the risks and therefore will not understand that they need this coverage. I tend to trust consumers to make their own decision about how they want to spend their hard earned dollars provided they have been given sufficient data and a chance to think.